Government bank regulators have proclaimed a new policy extending deposit insurance to $300 billion kept in overseas branches of U.S. banks, although the coverage is not authorized by law and banks do not pay for the insurance.

The Federal Deposit Insurance Corp., spelling out explicitly what had been an informal policy of insuring offshore deposits, said the strategy is necessary to protect the competitive position of the nation's big banks. The nine largest U.S. banks, according to the FDIC, have 51 percent of their deposits in offshore branches.

The new policy, taken without consultation with Congress or the Treasury Department, has already split the banking industry and sparked criticism from Congress, which is considering an overhaul of the federal bank insurance programs in the wake of a costly cleanup of the savings and loan industry.

The FDIC position was detailed in a letter written last week by Paul G. Fritts, director of supervision, explaining why the agency bailed out depositors who had $37 million in accounts in a Nassau branch of National Bank of Washington. Pointing to the heavy reliance of big banks on overseas deposits, Fritts said, "it was believed that negative repercussions would have been felt by these money-center banks if the Nassau deposits were not included in the NBW transaction, because of the confusion in the international markets that would have been created by such a decision."

International business is becoming increasingly important for big U.S. banks, which have huge operations in financial centers like London and Tokyo. Although most other nations do not have elaborate deposit insurance systems like that of the United States, their governments have promised to stand behind banks and protect depositors when banks fail. U.S. bankers contend they must be able to offer the same kind of protections to compete with their foreign rivals.

The deposit insurance system created by Congress in the 1930s does not authorize the FDIC to insure depositors in foreign branches of U.S. banks, but the FDIC has found ways to protect offshore accounts indirectly.

In most cases, the FDIC finds it cheaper to sell a failed bank to some other financial institution rather than simply pay off depositors. When the bank is sold, all deposits are transferred to the new owner -- in effect saying to the foreign depositors that the new bank will honor their accounts.

FDIC officials say bank rescue deals that protect foreign depositors are both justified and legal, so long as the cost to the taxpayers is less than paying off the depositors directly. Foreign depositors have been made whole in all bank failures for several years, FDIC officals said. In the case of NBW, the branch in the Bahamas was sold to Riggs National Bank, which took over the entire NBW operation.

The FDIC policy spelled out in the NBW case is likely to add to the pressure in Congress to revamp the deposit insurance system. There is already widespread bipartisan support in both houses of Congress to change the way overseas accounts are handled.

One solution -- advocated by Senate Banking Committee Chairman Donald W. Riegle Jr. (D-Mich.) -- is to renounce the FDIC policy and specifically forbid the FDIC from protecting offshore depositors in any way.

An alternative plan would require banks to pay for deposit insurance on their overseas deposits, as proposed by a number of legislators, including House Banking Committee Chairman Henry B. Gonzalez (D-Tex.), Senate Minority Leader Robert J. Dole (R-Kan.), Sen. Charles E. Grassley (R-Iowa) and Sen. Jim Sasser (D-Tenn.). The FDIC now has no legal power to make banks pay insurance premiums on their overseas accounts, since those accounts are not covered by law.

The banking industry is sharply divided on the issue. The American Bankers Association backs the Riegle proposal to deny deposit insurance coverage on foreign accounts while the Independent Bankers Association of America endorses charging banks for insurance on overseas accounts.

The FDIC could collect an additional $600 million a year to bolster the beleaguered deposit insurance fund if banks were charged premiums on their overseas deposits, said Kenneth Guenther, executive vice president of the Independent Bankers, which represents small banks that don't have foreign branches.

The FDIC policy was spelled out in a letter to Guenther, who described it as "an unusual letter. They're almost calling attention to the inequities in the whole system." Guenther and many members of Congress contend the FDIC policy is unfair to little banks, which must pay for federal insurance on all their deposits while the big banks get insurance on their foreign deposits.